ALJDEC decisions subject to certification as final

2018A-2226-ROC · Registrar of Contractors · 2019-03-20

IN THE OFFICE OF ADMINISTRATIVE HEARINGS

HEARING: March 1, 2019 APPEARANCES: Flavio Gonzalez, Complainant, Jefferson Roosen, Co- owner with Complainant, Tom Wood, Eric MacMillan, Respondent and Qualifying Party, Pam Molnar, Respondent’s Office Manager, Jack Grimm, Investigator, ROC. ADMINISTRATIVE LAW JUDGE: Randolph D. Wolfson _____________________________________________________________________ FINDINGS OF FACT Respondent, Matrix Contracting, LLC, [hereinafter, “ Matrix”], is the holder of License Numbers License No: 303861, 279406 issued by the Arizona Registrar of Contractors ( the “ROC”)[1] On or about May 17, 2018, Complainant Flavio Enrique Gonzalez [hereinafter, “Gonzalez”] entered into a contract with Matrix to, among other things design and install two air conditioner/heat pump units in Gonzalez’s residence. On or about May 23, 2018, the ROC received a Complaint[2] against Matrix from Mr. Gonzalez alleging Matrix performed poor below standard work and failed to apply for or obtain a required permit for the contracted work The ROC assigned the complaint to Investigator Jack Grimm for review and follow-up. A Jobsite Inspection was conducted by Inspector Grimm on June 18, 2018. Both Mr. Gonzalez and Matrix’s Qualifying Party, Eric MacMillan, were present. Investigator Grimm’s Jobsite Inspection Notes[3] recorded: Jobsite General Notes: Also present was Jeff Rossen, Co-owner of the property. Complaint Item 1: AC permit only obtained for master bedroom, although 3 units were replaced and installed. Two (2) of the units were trunked into one air duct system. The install does not allow for proper air flow to reach the upstairs unit as both air handlers are installed in the basement level two (2) floors below the deficient area. Having two (2) air handlers piped into one ducting system doesn't allow for proper cooling. There is also an absence of an air return on the upstairs floor to properly exchange air. Investigator’s Observation: Contractor stated that no permit was in place for the replacement of the units downstairs. Two air handlers were paired together to work as one. This does not appear to be a typical installation. Contractor states a chiller was in place in this location and his unlicensed AC guy changed it to this configuration. Both units are ducted into on duct system. It is my understanding that no new duct work was installed in the home to split the upper and lower \level. One return air is working at the ground floor level. Governing Rule: Code: 4-9-108(B) no permit. Complaint Item 2: Basement electrical was not completed for sump pump for water pump out. I had to have the original electrician install a proper plug to allow for sump pump water bail out [the] basement in the event of a flood. Investigator’s Observation: Completed prior to inspection. …

Complaint Item 3: Contractor had several unlicensed workers on the job site as a ledger payout summary was provided by the original owner of our home from Matrix. Investigator’s Observation: Contractor admits that the AC guy Zuniga AC was unlicensed. He states he was not aware he was unlicensed when he hired him. Sending adding and abating warning letter.

On June 28, 2018, Investigator Grimm issued a written directive to Matrix which provided as follows: Failure to comply with this Directive may also be treated as an aggravating factor should the Registrar pursue discipline of your license. You must notify the Registrar’s assigned Investigator of your compliance with this Directive prior to 5:00 p.m. on 7-16-2018. You are hereby directed to remedy the following violations by the appropriate means:

Obtain permit from governing code enforcement authority for installation of the downstairs HVAC unit. Receive approval for installation of an HVAC unit from the governing authority. Verify filter location is installed in an approved method.

All work must be performed by an appropriately licensed contractor. The Registrar has determined that any workmanship violations alleged in the complaint but not listed above are unsubstantiated and do not require corrective action. [Emphasis in the Original].

Following the issuance of the Written Directive, Matrix did not correct the items listed in the CWO before the CWO’s stated deadline of 5:00 p.m., July 16, 2018. On October 3, 2018, the ROC issued a Citation[4] against Matrix, charging possible violations of Charge :1 A violation of Rule 4-9-108, titled “Minimum Construction Standards,” in the Arizona Administrative Code, and thereby of A.R.S. § 32-1154(A)(3) and a violation of A.R.S. § 32- 1154(A)(22)(“Failure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar On October 18, 2018 Matrix filed its Answer asserting that “Matrix has yet to find any licensed HVAC professional that says any corrective action is necessary regarding the venting or the air return.”[5] No mention is made in the Answer to Matrix’s failure to obtain and pass a building permit regarding the downstairs HVAC unit installation.[6] A hearing was held on March 1, 2019 before the Office of Administrative Hearings, an independent agency from the ROC. ROC Investigator Jack Grimm testified consistent with his Job Site Inspection Notes,[7] that Matrix’s representative at the JSI stated that no permit was in place for the replacement of the HVAC units downstairs. He stated that to air handlers were paired together to work as one. He said that this does not appear to be a typical installation. Mr. MacMillan indicated to him that a chiller was in place in this location originally and his unlicensed Air Conditioner changed it to the configuration found at the JSI. Both down stair units have been ducted into one duct system. It is my understanding that no new duct work was installed in the home to split the upper and lower level. One return air is working at the ground floor level. Insufficient flow is obtained on the upper floor. This installation should have had a single thermostat instead of two separate thermostats that were installed. He said the two air handler units downstairs were inappropriately paired into one and there was no thermostat installed upstairs as would be required with this design. The Contractor stated that no permit was in place for the replacement of the units downstairs. Two air handlers were paired together to work as one. This does not appear to be a typical installation. Contractor states a chiller was in place in this location and his unlicensed AC guy changed it to this configuration. Both units are ducted into on duct system. It is my understanding that no new duct work was installed in the home to split the upper and lower \level. One return air is working at the ground floor level. Contractor stated that no permit was in place for the replacement of the units downstairs. Two air handlers were paired together to work as one. He said this does not appear to be a typical installation. Mr. MacMillan told Inspector Grimm at the JSI that a chiller was originally in place in this location. Mr. Macmillan told him that Matrix’s unlicensed AC guy changed it to this configuration. There are three A/C units in the home. The two units Matrix installed are ducted into a duct system. It is Mr. Grimm’s understanding that no new duct work was installed in the home to split the upper and lower level. One return air is working at the ground floor level. The units were not of the same size. Correct installation would require all of the units to be the same size... In Mr. Grimm’s opinion, the HVAC installation is below the standards of workmanship. Moreover, in that no permit was pulled listing the install of the new units, they were never inspected by the City of Phoenix. Thus, the below standard installation was not detected until He inspected the job site at the JSI. By proceeding with work without first pulling and obtaining a City of Phoenix permits was, too, below the standard of workmanship. Complainant Gonzalez testified that he purchased this home in March, 2018. He noticed immediately upon taking possession that the upstairs of the structure was very hot while the ground floors seemed a comfortable temperature. He contacted the seller, Christy Pettibone, and inquired about who she used to install the new HVAC system. He was advised by Ms. Pettibone that Matrix performed the work. He said he then contacted Matrix for it to come to the home to fix the A/C. He said that some of the house’s work by Matrix was permitted by the City of Phoenix, but the permits did not address the install of the two new HVAC units. He also testified that he advised Mr. Grimm that Matrix did not comply with the CWO before its deadline of 5:00 p.m. on July 16, 2018. He stated that all payments for work on this job were made to Matrix directly and no payment was made to the Montague Homes, LLC that Mr. MacMillan said owned the house before he bought it and whom Mr. MacMillan said actually did the work on the HVAC on this home... Mr. Gonzalez called Tom Wood as his expert to testify about the HVAC installation.[8] Mr. Wood has been active as an HVAC contractor since 1974. He has been certified by North American Technical Excellence for HVAC and heat pump system design, installation and repair for 9 years. He testified that he is an Arizona licensed contractor for HVAC. Mr. Wood explained that he inspected the Gonzalez home on December 17, 2018 and found the system install deficient in design. He stated that he found two furnaces were tied into one single duct, but the system had only a single downstairs thermostat. It requires two thermostats - one upstairs and one downstairs. Otherwise, with the Matrix installation, the system is just circulating air without cooling or heating it. This made the system completely inefficient. He also noted that the air conditioning units were not matched. All coils, size and tonnage of these units should be matched per manufacture specifications in order that they be expected to work as intended. He also notes that the duct cabinets installed were cut out in back, instead of on the sides of the cabinets. This reduced air flow and overall system efficiency. He testified that the design and the installation by Matrix was improperly done and was not to manufacture specifications. Mr. Eric MacMillan, Matrix’s Qualifying Party, testified for Matrix. He asserted at the hearing - for the first time in the case – that Matrix is not the contractor in this case and therefore the case ought to be dismissed.[9] He testified that Matrix did not work on this project at all. He explains that he, at the times relevant to this case, was a member of Montague Homes, LLC [hereinafter, “MH”] who owned the home before Mr. Gonzalez purchased it. He said that MH purchased this home to remodel it and “flip it” He stated that all work done on this residence was done by, through and for MH even though he admits that he is the person who actually performed the work [along with an unlicensed A/C contractor that he sub- contracted for some of the work]. Mr. Macmillan submits that he is not a contractor on this job. Instead, he was a member/owner of MH working on the MH investment property. Mr. MacMillan admits that all billing to the project came from Matrix, not MH. Mr. MacMillan. He was examined concerning the three City of Phoenix permits that were pulled on this job.[10] He admits each one of the permits list Matrix as the contractor for the job, not MH. He said Matrix was listed on the permits by his own error. He said he has pulled so many permits in the past for his business Matrix that he always states Matrix is the contractor on the permits application ought of mere habit. He testified that he did make an effort to pull permits for the new HVAC install on this job, but Mr. Gonzalez had changed the name of the contractor – removing Matrix as contractor and inserting a new contractor. He said he was advised by the City of Phoenix’s permit division that they would not allow Mr. MacMillan to pull a permit since he is neither the listed owner nor the listed contractor with authority to act for the owner in pulling a permit. He sought no assistance from Gonzalez to acquire proper permits. Administrative notice is taken of Matrix’s prior License record as reflected on the ROC’s public website on March 20, 2019. Such prior License record reflects that Matrix’s License No. 256686 was first issued on. There is no record that Matrix’s license has ever previously been disciplined. However, the contractor license for Matrix is in a suspended status for lack of bond.

CONCLUSIONS OF LAW

This matter lies within the ROC’s jurisdiction. See A.R.S. § 32-1101 et seq. Complainant bears the burden of proof to establish Matrix’s statutory violation by a preponderance of the evidence. See A.R.S. § 41- 1092.07(G)(2); A.A.C. R2-19-119(A) and A.A.C. R2-19-119(B)(1); see also Vazanno v. Superior Court, 74 Ariz. 369, 372, 249 P.2d 837 (1952). “A preponderance of the evidence is such proof as convinces the trier of fact that the contention is more probably true than not.” Morris K. Udall, Arizona Law of Evidence § 5 (1960). The credible evidence presented at hearing established that, notwithstanding Mr. MacMillan’s theory that he did not act as a contractor for this project, every detail pertaining to contractor work on this project was related solely to Matrix or to Mr. McMillian acting for or on behalf of Matrix. Matrix is listed on each of three City of Phoenix permits on this home [which Mr. MacMillan admits]; Matrix received funds in payment for contractor services on this project [which Mr. MacMillan admits] and Mr. McMillian has admitted that he performed the work on this site [along with an unlicensed sub-contractor of his]. Matrix, by a preponderance of the credible evidence, did provide the contractor work on this job. As to the issue of poor workmanship, the evidence established poor workmanship by a preponderance of the evidence in that contrary to correct practices,, two furnaces were tied into one single duct, but the system had only a single downstairs thermostat. It required two thermostats - one upstairs and one downstairs. Therefore, with the Matrix installation, the system just circulates the house air without cooling or heating it. Contrary to manufacture specifications, the air conditioning units sold to the Complainant and installed were not matched. All coils, size and tonnage of these units should be matched per manufacture specifications. The duct cabinets installed were cut out in back, instead of on the sides of the cabinets thereby reducing air flow and overall system efficiency. The design and the installation by Matrix was improperly done and was not to manufacture specifications. Therefore, by a preponderance of the evidence presented, Complainant Gonzalez DID establish that Matrix did not perform the work in a professional and workmanlike manner in violation of A.A.C. R4-9-108, and thereby of A.R.S. § 32-1154(A)(3).[11] The credible evidence established by a preponderance that Matrix received and was aware that the terms of the Written Directive and CWO required compliance on or before July 16, 2018. The evidence established that Matrix failed to make the repairs directed in the CWO and failed to obtain proper permits for the project. Therefore, it has been proven by a preponderance of the evidence that Matrix violated A.R.S. § 32- 1154(A)(22).[12] Pursuant to A.R.S. § 32-1154(E) the Registrar may impose a civil penalty of not to exceed five hundred dollars on a contractor for each violation of A.R.S. § 32-1154 (A)(22). RECOMMENDED ORDER Based on the foregoing, IT IS RECOMMENDED that on the effective date of the Order, the Registrar shall suspend Matrix Contracting, LLC License No: 303861, 279406 for six (6) days. FURTHER IT IS RECOMMENDED pursuant to A.R.S. § 32-1154(E) a civil penalty of $500.00 should be assessed against Matrix Contracting, LLC License No: 303861, 279406. FURTHER IT IS RECOMMENDED that if Matrix Contracting, LLC fails to pay the entire amount of the civil penalty on or before thirty days following the effective date of the Registrar’s Order, the Registrar shall revoke Respondent’s license, effective on such deadline date. No future license shall be issued to any entity consisting of persons associated with Respondent, as defined in A.R.S. § 32-1101(A)(5), unless Respondent timely tenders payment of the outstanding civil penalty pursuant to this Order.

In the event of certification of the Administrative Law Judge Decision by the Director of the Office of Administrative Hearings, the effective date of the Order will be 40 days from the date of that certification. Done this day, March 20, 2019.

/s/ Randolph D. Wolfson Administrative Law Judge

Transmitted electronically to:

Jeffrey Fleetham, Director Registrar of Contractors ----------------------- [1] Administrative Judicial Notice is taken of the entire electronic and physical files of the ROC in this case, including but not limited to, the public access website of the ROC. [2] Agency Record, Complaint, at page 61. [3] Agency Record, Jobsite Inspection Notes, page 173. [4] Agency Record, page 48. [5] Agency Record, “Written Answer to Citation and Complaint,” pages 14 and 158. [6] It is noted that at hearing the qualifying party asserted that Matrix performed no work on the project. Rather, Eric MacMillan, Respondent and Qualifying Party, contended he performed the work as an owner/member of the LLC that he said owned the subject property – not as Matrix. This contention was not mentioned in the Answer and was first raised at hearing. As will be discussed below, the contention is without merit. [7] Agency Record, Page 173. [8] See, Exhibit C-1, “Report of Tom Woods.” [9] A.R.S. §32-1101(A)(8), et seq.: 8. "Residential contractor" is synonymous with the term "residential builder" and means any person, firm, partnership, corporation, association or other organization, or a combination of any of them, that undertakes to or offers to undertake to, purports to have the capacity to undertake to, submits a bid to, or does himself or by or through others, within residential property lines:

a) Construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any residential structure, such as houses, townhouses, condominiums or cooperative units. Residential structures also include apartment complexes of four units or less and any appurtenances on or within residential property lines. b) Connect such residential structure to utility service lines, metering devices or sewer lines. (c) Provide mechanical or structural service for any such residential structure.

B. "Contractor" includes subcontractors, specialty contractors, floor covering contractors, landscape contractors, other than gardeners, and consultants representing themselves as having the ability to supervise or manage a construction project for the benefit of the property owner including the hiring and firing of specialty contractors, the scheduling of work on the project and the selection and purchasing of construction material.

[10] Agency Record, pages 69 though page 81. [11] A.A.C. R4-9-108 requires that “[a]ll work shall be performed in a professional and workmanlike manner” and that “[a]ll work shall be performed in accordance with any applicable building codes and professional industry standards.” A.R.S. § 32-1154(A)(3) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[v]iolation of any rule adopted by the registrar.” [12] A.R.S. § 32-1154(A)(22) includes among the grounds for suspension, revocation, or other disciplinary action against a contractor’s license, “[f]ailure to take appropriate corrective action to comply with this chapter or with rules adopted pursuant to this chapter without valid justification within a reasonable period of time after receiving a written directive from the registrar.” (Emphasis added).

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Office of Administrative Hearings 1740 West Adams Street, Lower Level Phoenix, Arizona 85007 (602) 542-9826